Market Commentary – Bear Market Far from Over

Below is more commentary from another investing firm (Comstock Partners, Inc.) on the recent market turmoil.

The market erroneously assumed that the recovery would follow the pattern of typical post-war expansions and rallied strongly from the early 2009 bottom to the recent highs.

…crisis recoveries are characterized by short sub-par recoveries and numerous recessions as household debt burdens dampen consumer spending for long periods. We did see the short sub-par recovery and now it seems to be ending at a time when the Fed has already used its best weapons and fiscal policy is due to become more restrictive.

Interesting to note that their outlook is similar to other secular bear commentary that I’ve posted here before.

Whether you agree with all his insights or not, John Mauldin has been saying for months (if not years) that this recovery will look much different than other, “post-war” recoveries because we’re at the end of a debt super cycle.

Check the facts:

  • August Philly Fed Index fell to minus 30.7 from 3.2 in July
  • August University of Michigan Consumer Confidence Index dropped to 54.9 (31 year low!)

The situation is worse, in Europe. Comstock reported that on August 18th, the European Central Bank claimed one bank (not named) that borrowed 500 million Euros a day for seven days…sounds really familiar to our situation in 2008. I won’t even dive into the fact that the economies of Germany and France aren’t growing.

In case you were wondering, yes, these are the types of numbers one would expect to see in a recession (or even the beginnings of a depression – yikes). Comstock feels that we have entered into a major market downtrend, with brief rallies here and there.

What are you doing to protect your personal financial situation and your investments?

Sources:
Bear Market Far From Over
Comstock Partners, Inc. | August 18, 2011
http://comstockfunds.com/(X(1)S(sibbi3u0qea4jzzrlhk53p55))/default.aspx/act/newsletter.aspx/category/MarketCommentary/MenuGroup/Home/NewsLetterID/1601/startrow/1.htm

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2 Responses to Market Commentary – Bear Market Far from Over

  1. Al says:

    As the markets decline, how long should one wait before purchasing great stocks at a discounted price?

    • InvestSafely says:

      Timing your buys and sells depends on your strategy. The method used by Investors Business Daily is great at combining technical and fundamental analysis, and boasts that no stock market uptrend has EVER started without a so-called “follow-through” day. That said, not all follow-through days lead to rallies, but it is at least a sign to look for before making any buys.

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